Central Bank Of Nigeria (2008) estimated that only 2.5% of The loans offered by commercial banks is directed at agriculture. Thus, The Nigerian government has developed other ways to finance Agriculture. These includes:
i. The Nigerian Agricultural Cooperative Bank (NACB)
ii. Farmers Credit Scheme (FCS)
iii. Family Economic Advancement Programme (FEAP),
iv. Women, Youths Empowerment Scheme (WYES).
Oruonye and Musa ( 2012) researched some of the challenges of Microcredit In Nigeria. The research showed some of the problems faced by farmers in Nigeria as regarding the use and access to microcredit. the problems are summarized thus:
1. Amount given is too small
2. High interest rate
3 Defaulting in payment
4 Delay in approval of government loan
The result showed that delay In the approval of loans and high interest rate where the biggest challenges faced by farmers.
Kuye ( 2015) studied the some cassava farmers from south-south Nigeria who were beneficiaries of agric loan from 2012-2014. The result showed that non-repayment of loan by farmers, high default rate, inadequate monitoring and evaluation, illiteracy of farmers and lack of farmers’ awareness about bank products (innovation) were among the greatest constraints that hinder loan administration by bank officials in the study area.
His research showed a repayment rate of between 72-85% for small scale farmers and 80-97% for medium scale farmers.
Bankers Farmers (BF) platform seeks to validate Farmers credibility and collateral for loan acquisition from financial institutions while ensuring that both the farmer and the Bank's interest are protected.
BF works on the Principle that farmers who are registered on this platform provide their lands, labour and experience while the banks provide the capital. The proceeds from the farm is now shared in agreed percentages.
It helps spread the risk of loan acquisition: The banks have a higher stake and so employ necessary technology and information to support farmers. The farmers also ( who must have use their Land as collateral) would do their best to protect investments.
It reduces the incidence to loan repayment: Banks would not have to wait for farmers to bring back their money to them after selling their produce but can take their percentage of produce at the end of the harvest season and sell.
It reduces the incidence of loan diversion: Loans can be given in kind, not necessarily cash e.g agricultural inputs. This would reduce the tendency to divert cash.
Better exposure to markets: the banks have higher exposure to technology and information which they can use to find better markets for their farmers. Banks could be in a better position to position platforms that connect buyers to farmers thus acting as middlemen to the farmers. They can run Foodbanks or Cropbanks in addition to money banks where people can source for Produce. This can go a long way to improve the livelihood of farmers.
in Nigeria, banks have been involved in General Insurance, health insurance real estate project as well as other investments. But to grow our economy in a way that it affects the masses, there is need to get more involved in the popular occupation of the masses-agriculture.
The Bankers' Farmer platform seeks to give Banks the opportunity to participate more in agriculture to enable them better protect their investments while ensuring that the capital needed to invest in agriculture is provided.